The problem with YouTube Premium is the pricing tiers are completely out of touch with what people are willing to pay and what services they’re willing to pay for.
Let me compare to Discovery+. For $9 a month, loads of shows that ran on TV for decades can be streamed at 1080p (or whatever resolution they were available in), on up to four devices at the same time. They still have some original shows that they spend money to make. This service does not have ads.
Let’s also compare to Nebula, which like Discovery+ also has original content funded by the platform. Every content creator there is also an invited owner of the platform, so their cost structure is a bit different, but they still have to sustain the costs of running a streaming platform while compensating the creators of said content for views. Nebula is a microscopic $5 a month per user with no ads.
YouTube is a platform with entirely user-generated content (costs YT nothing except bandwidth) that is already supported at the free tier with a gratuitous amount of ads. This service has been available completely free with ad support for nearly two decades. The lowest “premium” tier they offer is $14 a month for one person to stream ad-free, at a better 1080p bitrate, be able to download videos or watch them in the background in the official app, pay creators for every view, and have a music streaming app thrown in for good measure. The only other tier is all the same stuff in a $22 monthly family plan for six users, but they all have to be in the same “household” or you’re technically breaking TOS, so in practice it’s often more like $22 for three people, and heaven forbid any of you travel for work.
Two of the “premium” features should be free anyway. You can’t watch a video without downloading it at least once, so the bandwidth cost is the same. If you download it and play it more than once, that actually saves YouTube bandwidth, and therefore cost. Any video that’s played more than once is probably going to be played a lot more than once, so this would add up, especially if the app downloads the ad spots ahead of time. Background play doesn’t cost them any bandwidth at all and is a trivial feature to implement, so it’s put behind a paywall as an artificial restriction for no other reason than to annoy users for not paying. Both of these are anti-features; to charge for them is anti-consumer. They engender spite in users, making them less willing to pay for Premium and more determined to find alternatives.
Instead of trying to figure out what people are actually willing to pay for, which is the expected behavior of a market actor, Google continues to behave like a monopoly that can dictate terms to its users. This is why people refuse to pay for Premium. If they made the anti-features free, and introduced a Premium tier that is $7 a month to one user for nothing more than better bitrate streaming with no ads, people would sign up in droves. There could be a $9 tier for streaming boxes like Roku or Chromecast that offers Premium service for any account viewed from that one specific device, without having to sign up each individual account for premium, which satisfies another niche. The $14 tier could remain for those who also want music streaming (an extra $7 is still much cheaper than Spotify premium), and the $22 tier could still be a significant value proposition for actual families.
It’s not that the price offered for the $14 premium plan isn’t reasonable for what it offers - the issue is that what it offers doesn’t match the actual needs of many people who use adblockers or third-party clients, on top of insulting users with anti-features. Until YouTube management can be made to understand this, they will continue to screech impotently about ad-blockers while driving users away and leaving potential revenue on the table.